Financial Promotions Order

Posted on 28 November 2023

Financial Promotions Order Updates


UPDATE FOLLOWING SPRING BUDGET

The below changes were reversed following the Spring Budget. 
A statement from the FCA can be found here:   https://www.fca.org.uk/news/statements/changes-financial-promotions-order


ORIGINAL POST:

KEY CHANGES FOR HIGH NET WORTH INDIVIDUALS AND SOPHISTICATED INVESTORS

In this post, we explore the latest adjustments to financial promotion exemptions for high net worth individuals (HNWI) and self-certified sophisticated investors (SCSI) with insights from HM Treasury's consultation response, released in November 2023.  Our summary delves into the crucial modifications under the Financial Promotions Order (FinProm). 

Whilst we have already shared a link to the new FinProm order (HERE: FinProm), we wanted to share our summary takeaways from the consultation response.

Summary of Changes:

  • Significant alterations to exemptions under the Financial Promotions Order, impacting HNWI and SCSI.
  • Currently applicable to unauthorised entities, such as property companies seeking funds for bonds.
  • No immediate impact on regulated firms, including platforms such as Simple crowdfunding.  Future implications are unknown.

Key Highlights:

Updated Financial Thresholds:
  • Net worth/income thresholds now aligned with inflation, set at £170k/£430k (annual income/net assets).
  • Declarations mandate precise reporting of income/net worth, rounded to the nearest £10k/£100k.
SCSI Criteria Adjustments:
  • Removal of the criterion requiring SCSI to make more than one investment in an unlisted company within the past two years.
  • Increased company turnover threshold for satisfying the 'company director' criterion to £1.6m (from £1m).
Enhanced Disclosure Requirements:
  • Businesses utilizing monetary exemptions must provide detailed information in all communications using these exemptions.
Effective Date:
  • New regulations take effect at the end of January 2024.
Declaration Validity:
  • Declarations maintain a maximum validity of 12 months from the signing date.

New Declarations:






Impact on SCSI Investors:

In our opinion, the biggest change affects the SCSI categorisation.  The redefined criteria is likely to reclassify numerous SCSI investors as restricted, rendering them inaccessible for certain unregulated investments.


Transitional Provisions:

  • FinProms issued after January 31, 2024, must adhere to the updated rules.
  • Unauthorised entities need updated declarations from clients / marketing lists to continue using email for FinProms post-January 30, 2024.
  • Web access (authorized user) must be updated to align with new rules, preventing potential investors from viewing new offers without completing and signing updated declarations.

Unlocking Financial Opportunities with Simple Crowdfunding Amid Regulatory Shifts

In the face of evolving financial promotion regulations, businesses engaged in fund-raising activities under existing exemptions may encounter challenges. At Simple Crowdfunding, we stand ready to provide assistance, ensuring a seamless transition through these changes.


Our Offerings:

  • Whether your funding needs revolve around equity or debt, our comprehensive solutions cater to both.
  • Our platform accommodates both private and public fundraising endeavors, granting flexibility to businesses of all sizes.
  • The Simple Crowdfunding team takes charge of approving financial promotions, facilitating continuous engagement with potential investors.
  • Embrace inclusivity in your communications – reach not only high net worth individuals (HNWI) and self-certified sophisticated investors (SCSI) but also restricted (everyday) investors.
  • Reach ISA and SSAS investors.

Connect with Us:

Embark on a journey of fundraising with Simple Crowdfunding. Reach out to us for more details on how we can navigate these regulatory changes together and optimize your fundraising endeavors.

Contact Us to find out more.


Whichever route you take, stay ahead of these changes to ensure compliance and seamless financial promotion practices in the evolving regulatory landscape.

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